Cryptocurrency is a decentralized mode of payment that does not require any intermediately, such as financial institutions. This characteristic of cryptocurrency is novel; due to this, most nations do not have legislations that can regulate the operations of Blockchain-based technology. you can visit thequantumai app to know more.
However, many national governments are making amendments and introducing new laws to define it, regulate its use, prevent illegal activities and impose a tax on income generated from trading in crypto. Several developed and developing economies have already formulated and passed bills regulating cryptocurrencies and related digital assets.
As cryptocurrency and the whole ecosystem is dynamic, so is the legal aspect of it. Some amendments are constantly brought up by the governments of various nations to control the use and misuse of technology. Following are the major changes in the cryptocurrency ecosystem in various countries.
The United States of America
The US is currently in the process of formulating a nationwide cryptocurrency policy. The policies revolving around cryptocurrencies are a matter of state-level legislation. The government does not recognize cryptos as legal tender. Different government bodies define cryptocurrencies differently.
Back Secrecy Act, which is an act that obligates financial institutions to report any cryptocurrency trade to the US government. To have vigilance over criminal activities, exchange service providers must maintain transaction records, file reports, and submit them to FinCEN. Following are the various US government bodies that define cryptocurrency differently.
- Commodities Futures Trading Commission (CFTC) considers cryptos as a commodity.
- The Securities and Exchange Commission defines cryptos as securities and imposes securities law.
- Internal Revenue Service (IRS) identifies cryptocurrency as “the virtual representation of value.”
The US judicial system is formulating crypto regulations, in collaboration with the Commodities Futures Trading Commission and Securities and Exchange Commission to tackle the illegal activities carried out using cryptocurrency.
The bill says that every transfer of funds over $10000 will be considered suspicious and a suspicious activity report has to be filed and submitted to the government. And every registered cryptocurrency exchange is obligated to reveal the identity of the crypto wallet owner if a transaction is worth over $3000.
United Kingdom
Cryptocurrency is among the most widely accepted concepts of payment in the UK. Despite many cryptos in the market, the crypto domain is still ruled by Ethereum and Bitcoin. These digital assets are governed in the UK to prevent money laundering. The UK still lacks regulations on the matters of cryptocurrencies. The United Kingdom left European Union in the year 2020.
The regulations will be similar to that of EUs for a while until the UK formulates its legislation. From August 30, 2022, onwards, Office of Financial Sanction Implementation (OFSI), Every exchange firm is required by OFSI to abide by the rules it has put in place. Businesses using cryptocurrency for financial transfers now have to report any questionable or fraudulent financial activities.
In the UK, cryptocurrencies are recognized as assets. However, mandatory registration is required for every crypto exchange. UK’s Financial Conduct Authority (FCA) is a government body that regulates the crypto exchange. It also took control to prevent money laundering and terror funding operations of the cryptocurrency.
In January 2022, the UK’s government declared that they are developing policies that govern misleading and false advertisements for promoting cryptocurrencies. This year in October, the British parliament classified cryptocurrency and related assets as financial instruments.
Canada
Cryptocurrencies can be used to pay for goods online or at businesses that accept them, but it is not legal entity. The government of Canada has taken proactive measures in formulating policies revolving around cryptos. They have implemented provincial securities rules. From 2013 onwards, the revenue agency of Canada imposed and collected tax on cryptocurrencies according to the nation’s tax regulations.
Canada introduced the Proceeds of Crime (Money Laundering and Terrorist Financing Act) the year after, in 2014. (PCMLTFA). After the reform in the mentioned Act, the crypto trade in Canada is basically under the government’s vigilance in the same manner as businesses that provide financial services. Crypto exchanges must follow the same obligations as their financial service providers.
Following a reform in the PCMLTFA in 2019, cryptocurrency trade in Canada is essentially supervised similarly to financial services businesses.
Conclusion
As an investor in cryptocurrency, one must keep up with the legal and political changes to maximize profit and cut losses. Visit this website to see a review of the various changes made in legislation of different nations. Cryptocurrency is not a bubble, and it’s not going to go away.
There are multiple benefits of it that are compelling companies and even governments to adapt. Governments in some nations are planning to incorporate blockchain technology and cryptocurrency for their financial operation. Hence, it is expected to see many more amendments in the laws about cryptocurrencies.
